RESULTS OF THE FOURTH QUARTER OF 2011 AND OUTLOOK. February 2012

Transcription

1 RESULTS OF THE FOURTH QUARTER OF 211 AND OUTLOOK February 212

2 DISCLAIMER "This presentation and the associated slides and discussion contain forward-looking statements. These statements are naturally subject to uncertainty and changes in circumstances. Those forward-looking statements may include, but are not limited to, those regarding g capital employed, capital expenditure, cash flows, costs, savings, debt, demand, depreciation, disposals, dividends, earnings, efficiency, gearing, growth, improvements, investments, margins, performance, prices, production, productivity, profits, reserves, returns, sales, share buy backs, special and exceptional items, strategy, synergies, tax rates, trends, value, volumes, and the effects of MOL merger and acquisition activities. These forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include, but are not limited to developments in government regulations, foreign exchange rates, crude oil and gas prices, crack spreads, political stability, economic growth and the completion of ongoing transactions. Many of these factors are beyond the Company's ability to control or predict. Given these and other uncertainties, you are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which speak only as of the date hereof) to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events, except as maybe required under applicable securities laws. Statements and data contained in this presentation and the associated slides and discussions, which relate to the performance of MOL in this and future years, represent plans, targets or projections." 2

3 ALL TIME HIGH EBITDA IN 211 International Upstream contribution delivered the growth Q3 211 restated Q4 211 Q4 21 restated % (IFRS), in HUF billion FY 21 restated FY 211 % In Q (5) EBITDA EBITDA excl. special items (1) o/w Upstream (7.1) 3.1 n.a. o/w Downstream (34) o/w Gas Midstream (84) Profit from operation (27) Profit from operation excl. special items (1) (1) Clean CCS-based operating profit (1) (2) Net financial expenses/(gain) (43) 36.4 (31.1) 36.1 n.a. Net profit for the period (3) (61) Net profit for the period excl. special items (1) (3) (31) Operating cash flow (2) EBITDA (1) increased due to higher Upstream contribution, which more than offset weak Downstream performance. Upstream growth were boosted by the restart of Croatian oil and condensate sales after Sisak returned to operation in November and strengthening USD, which more than offset the negative effect of lack of Syrian revenues in Q4. Downstream operated still in a very unfavourable external environment, hit by further shrinking light heavy differential, increasing energy costs, seasonally higher OPEX and all time low integrated petrochemical margin Group Clean CCS R&M operating profit (2) excluding INA remained profitable emphasising the strength of our most complex refineries. Group (1) Special items of operating profit and EBITDA are detailed in Appendix VII and IX of the Q4 211 Flash Report. (2) Estimated Current Cost of Supply based operating profit/(loss) excluding special items, FX gain or loss on debtors and creditors and impairment on inventories in Refining and Marketing 3

4 UPSTREAM - STABLE PRODUCTION High crude price, stronger USD 12 Brent (USD/bbl) ,5 113,4 4% HUF/USD average 19, Q4 21 Q3 211 Q ,1 194,6 16% ,5 Q4 21 Q3 211 Q Total realized hydrocarbon price (USD/boe) 6,9 % 73,9 74 Q4 21 Q3 211 Q ,42 HRK/USD average 5,28 5% 5,57 Q4 21 Q3 211 Q Daily hydrocarbon production (m boepd) 144,8 145,8 143,4 6,9 5,5 4,5,7 4,2 4,2 5,7 4,7 4,7 4,7 4,9 5 5,2 14,3 13,8 38,9 33,8 34,3 34,6 3,9 31,7 6,8 6,9 5,3 9,5 9,1 8,6 19,5 18,6 18,8 12,7 11,8 11,5 Q4 21 Q3 211 Q4 211 Other international cond. Croatian condensate Syrian condensate Hungarian condensate Pakistani gas Syrian gas Croatian gas Hungarian gas Other International crude oil Croatian crude oil Russia crude oil Hungarian crude oil Supporting price environment Average daily hydrocarbon production decreased slightly in Q4 mainly due to announced production cuts in Syria, and lower Croatian crude oil and condensate production. Upstream 4

5 UPSTREAM RESULT WAS RECORD HIGH IN Q4 14 EBITDA* (HUF bn) % 131,4 121,2 18,1 Q4 21 Q3 211 Q Positive effects of Restart of Croatian oil and condensate sales to Sisak (back to operation in November) Strengthening USD against HUF 1 Operating profit* (HUF bn) were moderated by negative effects of % 87 82,4 81,3 Q4 21 Q3 211 Q Lack of Syrian revenues e Severe impact of regulated Hungarian natural gas price for household costumers Slight production decrease Upstream * Excluding special items 5

6 AND ALL TIME HIGH IN ,3 EBITDA* (HUF bn) 162,6 212,3 21% 4,8 484, ,4 Realized hydrocarbon price (USD/boe) 75,4 52,2 26% 57,9 72, * Excluding special items Operating profit* (HUF bn) 3 16% Results were boosted by positive effects of ,9 125,8 144,7 284,2 33, Upstream CAPEX - o/w exploration CAPEX (HUF bn) , 11,9 4,4 39, Upstream o/w exploration + higher average hydrocarbon production driven by increased volumes from Syria 26% higher realized hydrocarbon prices due to increasing international quotations. ti and moderated by the negative effects of - Hungarian regulated gas price for household customers slightly weaker USD Upstream 6

7 DOWNSTREAM: STILL DEPRESSED MACRO ENVIRONMENT High oil price and falling Brent-Ural spread ruled the conditions Brent-Ural differential (USD/bbl) 1,5 17 premium unleaded (USD/t) /FOB ROTT/ 1 12 gas oil (USD/t) /FOB ROTT/ 1,45 67% 7 Q4 21 Q1 211 Q2 211 Q3 211 Q4 211,5, fuel oil 3.5 (USD/t) /FOB MED/ -2 26,26-25 Q4 21 Q3 211 Q bitumen (USD/t; Argus ITA) Worsening external conditions due to (1) further shrinking Brent-Ural spread, (2) lower average crack spread and (3) decreasing petrochemical margin to historical low level. Do ownstream 7

8 MOL SALES OUTPERFORMED THE CORE MARKET Consumption of motor fuels in the CEE region decreased Q4 - Demand change of Motor Fuels * Q4 Market Q4 MOL Group y-o-y y change % Gasoline Diesel Motor Fuel Gasoline Diesel Motor Fuel Hungary (2.7) (6.6) (5.4).1 (2.6) 1.9 Slovakia (1.2) (3.8) (5.6) (2.6) (.) (.7) Croatia (11.9) (13.5) (13.) (6.6) (4.) (4.8) Other (4.8).3 (1.).2 (3.3) (2.3) CEE 1 countries (5.2) (1.) (2.1) (1.1) (.9) (1.) FY - Demand change of Motor Fuels * y-o-y change % FY 211 Market FY 211 MOL Group Gasoline Diesel Motor Fuel Gasoline Diesel Motor Fuel Hungary (5.7) (.9) (2.5) (3.3) Slovakia (9.4).4 (2.5) (1.) Croatia (11.4) (8.1) (9.1) (9.4) (6.4) (7.4) Other (4.8) 2.8 (1.2) CEE 1** countries (5.4) 2. (.) Do ownstream Source: Company estimates ** Volume weighted 8

9 DOWNSTREAM in Q4 211 SUFFERED FROM EXTERNAL ENVIRONMENT Clean CCS R&M profit** excluding INA is still positive Downstream EBITDA* (HUF bn) External refined product and petrochemical sales (Mt) 3 6 3% ,1 11,6-7,1 Q4 21 Q3 211 Q ,3 5,4 5,2 Q4 21 Q3 211 Q4 211 EBITDA* turned to negative - challenging Downstream environment seasonally higher operating costs (energy and maintenance costs) CCS-based** R&M operating profit -Group (HUF bn) -8,8-1,2-29 CCS-based** R&M operating profit MOL excl. INA (HUF bn) ,7 1,5 seasonally weaker retail sales just slightly moderated by internal efforts efforts to maintain sales margin Q4 21 Q3 211 Q % 4,2 Q4 21 Q3 211 Q4 211 * Excluding special item ** Excluding special items, forex gains on debtors and creditors and impairment on inventories + Do ownstream 9

10 DOWNSTREAM IN 211 DEPRESSED EXTERNAL CONDITIONS Relatively healthy profit contribution of clean R&M excluding INA EBITDA* (HUF bn) External refined product and petrochemical sales (Mt) % % ,1 2,4 2, The refining business was challenged by: higher cost of own consumption and loss, due to high oil price and Croatian refinery stoppages CCS-based** R&M operating profit -Group (HUF bn) CCS-based** R&M operating profit MOL excl. INA (HUF bn) lower average crack spreads and integrated petrochemical margin ,9-21, ,8 21% * Excluding special item ** Excluding special items, forex gains on debtors and creditors and impairment on inventories 4 5, Results were supported by internal efforts, as + efficiency improvement, improving product slate, increasing market share on CEE market. 1 Do ownstream

11 GAS MIDSTREAM HIGHER RESULTS DUE TO LOWER CROATIAN LOSS Better transmission result after end of tariff freezing in July Gas Midstream Operating profit* (HUF bn) 24% 65,7 52, FGSZ Zrt. HUF 46.6 operating profit in 211 negative effect of frozen gas tariffs ended in July 1% decline in transmission volumes (milder weather conditions) increased transit volume by 4% favourable change in foreign exchange rate Recognition of previous investments in regulatory asset base increased revenues 5 FGSZ Operating profit (HUF bn) 6% Prirodi Prin HUF 5.1 bn operating loss in Q4 211 due to the increasing import price and ,6 44, the application of the maximum level of the natural gas price for the eligible customers no tariff increase for household customers Ga as Midstream * Excluding special items 11

12 STRONG FINANCIAL POSITION 211 CAPEX is below target due to conservative approach Operating cash flow before changes in working capital (HUF 15 bn) % 3% 25% 2% Gearing position 31% 27% 28% Robust operating cash fully covered CAPEX payments Net debt (HUF 9 bn) and gearing increased slightly vs Q3 211 as a results of significantly weaker closing 211 HUF FX rate. 5 Q4 21 Q3 211 Q % Q4 21 Q3 211 Q CAPEX (HUF bn) CAPEX spending was 18% lower in 211 vs 21, with the following focus: 1 Upstream: CEE region, Russia and Kurdistan Region of Iraq 5 123, 11,9 123,2 11,9 79,7 18,2 Upstream Downstream Gas Midstream Downstream: Thermal Power Plant revamp at Bratislava refinery and finalization of Rijeka refinery modernization Financial 12

13 outlook Executive summary Upstream Downstream Financials Outlook 13

14 SOLID BASIS FOR ORGANIC GROWTH Executive summary GROUP 3 bn USD EBITDA generation in 211 >7% from Upstream, >5% from international operation UPSTREAM More than 2% organic reserve replacement rate in 211 Stable production for and 3-4% production growth from Bboe recoverable resource potential 9 wells to be drilled in Kurdistan Region of Iraq in DOWNSTREAM Despite week external environment MOL s largest refineries performed well Long term tendencies justify complexity and diesel focus Selective investments to maintain leading position of top assets Increase captive market and improve profitability FINANCIALS Stable financial position, No additional financing need in 212 Fitch reinforced MOL s investment grade credit rating CAPEX should be fully financed by operating cash-flow Executive e summary 14

15 OVER 2% RRR: 117 MMBOE RESERVES* BOOKED IN 211 Broader set of core countries Russia, Kazakhstan Breakdown of reserves** Breakdown of reserves increase in % 5% 2% 1% 6% 682 MMboe 25% (MMboe) % 1 Hungary Croatia Russia Syria Kazakhstan Pakistan Other 9% % 682 MMboe Oil Gas Condensate 47% 2 Hungary Croatia Russia Syria Pakistan, Egypt, Angola Kazakhstan Total Upstream outlook *Key additions were audited by noted auditors: DeGolyer and MacNaughton **2P figures contain Syrian reserves

16 212 PRODUCTION: 121 MBOEPD WITHOUT SYRIAN CONTRIBUTION 3-4% production growth from 214 Total hydrocarbon production* by countries (mboepd) Total hydrocarbon production by products (mboepd) Hungary Croatia Russia Other international Short term growth Largest contributors is expected from Russia Oil Gas Condensate Upstream outlook * Production forecast does not contain Syrian contribution

17 ADDITIONAL RESERVE GROWTH FROM 1.4 BBOE RESOURCE Supporting long term growth Recoverable Resource Potential*, WI (MMboe), SPE 2P SPE 2P reserves* (MMboe) SPE 2P 2P Reserves (211) RRP RRR could reach Largest 13% contributors in the next 3 years Expected production Reserve addition expectation Upstream outlook *Expected reserves addition and recoverable resource 1 USD/boe. *SPE 2P reserves are entitlement based, while recoverable resource potential is working interest based. * MOL estimate 17

18 COMPANY-MAKER POTENTIAL IN KURDISTAN REGION OF IRAQ 2explorationand and 7 appraisal wells in in two blocks Block Fully diluted WI Operator Partner Akri-Bijeel 51.2% MOL GKP Shaikan 13.6% GKP MOL Intensified exploration and appraisal program to fully explore block potential Ongoing early production from Shaikan Block Construct surface facilities in Akri-Bijeel to Largest start contributors early production in 212/213 year turn 725 MMboe recoverable resource potential** Commercial production exp. as of 215/217 with projected peak mboepd* in Upstream outlook *Fully diluted entitlement based at 12-8 USD/bbl. **Expected reserves addition and recoverable resource 1 USD/boe. resource potential is working interest based. MOL estimate. 18

19 RUSSIA, KAZAKHSTAN UNRECOGNISED VALUE Largest contributors to short and mid-term production growth Largest contributors Fedorovsky Block SPE 2P Reserves (MMboe) - WI 186 Recoverable resource potential* (MMboe) 235 SPE 2P Reserves (MMboe) - WI 37 Recoverable resource potential* (MMboe) 1 Production 211 (mboepd) 18.7 Expected production in 217 (mboepd) 4 *Working Interest (unrisked) Peak production, plateau (year) Peak production, plateau (mboepd) - WI *Working Interest (unrisked) 1% exploration success rate Significant reserve booking in 211 Largest contributors Largest contributors More than doubling production First production in 215 Upstream outlook 19

20 CHALLENGING REFINERY ENVIRONMENT only gradual improvement expected CHALLENGES EXPECTED DEVELOPMENTS USD/bbl 15 1 Crude oil price Surging crude oil price increased costs on own consumption & loss We expect oil to stay on similar levels also in mid term 5 dramatically Brent DTD crude oil price USD/bbl 14 Refinery margins NWE Urals Cracking USD/bbl Brent-Ural spread Brent Ural spread Deteriorating DS market in Europe in 211 still the GDP correlated diesel drive the profitability Shrinking and fluctuating Brent-Ural spread Many downstream companies under water, further shutdowns Real margin improvement in-line with demand increase Returning Middle East heavy supply New discoveries are heavy oils Quality differences should be reflected in price Downstrea am outlook 2

21 LONG-TERM TENDENCIES JUSTIFY COMPLEXITY AND DIESEL FOCUS Favourable balance of landlocked CEE market Supply-Demand Balance / 216 / 22 (including refinery and bio supply in Mt) North-West Europe CEE- MOL s Core region Gasoline Diesel Supply-Demand Balance of the CEE region Other Mediterranean* 15 Gasoil Balance Gasoline Balance Diesel demand supported by favourable long term regional GDP growth Increasing diesel shortage provides room for further mid-term diesel projects (Rijeka DC, Duna HCK) Largest contributors Stable gasoline surplus requires keeping existing flexibility through refining-petrochemical integration (new LDPE unit) Downstrea am outlook Source: Woodmac and MOL estimates. 21

22 INCREASE EFFICIENCY AND IMPROVE PROFITABILITY by optimization of assets and processes on Group level Reinforce Regional Downstream by utilising all synergies of integrated operation I.) Value Chain Optimization Improved crude selection On demand d production in refineries i Maintain petrochemical integration Net Cash Margin ranking of European refineries*(21) Bratislava Danube *Source: Woodmac. Rijeka Mantova Sisak Aim to reach-break even operation in Croatia till 214 II.) Asset Management Selective organic growth projects: Butadiene, LDPE, Rijeka Improve or reshape less efficient assets (Croatian downstream, IES) Logistics & Retail network optimization i to serve captive market Focus on Energy Management to reduce OPEX III.) Market management Make or buy own production vs local purchase Capture additional sales margin with higher wholesale &retail IV.) Resource and process efficiency Comprehensive efficiency program Decrease OPEX via process optimization Downstrea am outlook 22

23 SELECTIVE INVESTMENTS TO MAINTAIN LEADING POSITION and improve profitability LOGISTICS AND RETAIL INVESTMENTS Growth in high margin captive market New logistics, depots ensure better market reach Largest contributors Retail investments focuses on growth markets and sites with favourable position SELECTIVE PETROCHEMICAL DEVELOPMENTS Ensure flexibility & capture profitable niche segment CROATIAN DOWNSTREAM Exploit high margin butadiene market New 13 ktpa butadiene unit: cca. EUR 1 mn CAPEX; ~EUR 5 mn EBITDA improvement Maintain synergies Largest from Refining contributors Petrochemicals integration Shut down 3 old, subscale LDPE units, new 22 ktpa LDPE unit, CAPEX: cca. EUR 26 mn Increased flexibility - higher naphtha off-take from refineries (plus cca. 12 ktpa) Aim to reach break-even operation till 214 with gradual improvement Short term efficiency actions: OPEX cut, logistics & retail network rationalization On-demand operation of refineries Largest contributors New pipeline connection between refineries i for flexible, synergetic operation Preparation for residue disruption (new Coker unit) Downstrea am outlook 23

24 FURTHER STRENGTHENED FINANCIAL POSITION Fitch reinforced the investment grade credit rating Covenants Gearing (%) USD bn 3 3, ,5 2, , ,5 1 25, EBITDA Net debt to EBITDA Gearing Keep covenants and gearing in the safety zone Largest contributors 3.4 years average maturity profile Financials 24

25 CAPEX SHOULD BE FULLY FINANCED FROM OPERATING CF Up to annual USD 2 bn CAPEX spending GROUP Kurdistan, Iraq: Akri-Bijeel and Shaikan blocks Russia: Baitex and Matjushkinsky k blocks 21% 4% 25% Upstream Gas Midstream 5% Downstream Contingency Key organic gro owth proje cts U pstream Downstream Kazakhstan: Federovsky block Hungarian conventional and unconventional exploration Croatian exploration and field development Hungarian field development Modernization through new LDPE unit, Slovnaft Rijeka residue processing Delayed Coker Butadiene Extraction Unit Logistic and retail development Financials 25

26 THANK YOU FOR YOUR ATTENTION! Financial reports, announcements, other information and download possibilities can be found on our homepage: ir.mol.hu MOL Investor Relations: Tel: